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So I'm currently an undergrad finishing my BS in CS and am in the midst of applying to jobs and evaluating job offers. Beyond base salary, I've realized I don't really know how to evaluate the other portions of offers, such as health benefits, retirement benefits, stock options, bonuses, etc. I was hoping the more experienced people at TR could offer some guidance as to what to look for in a good offer in terms of all that?

Congrats on the degree and here's hoping the offers are good!

First off, I would almost completely discount any retirement benefits. Unless you're looking at civil service positions, retirement plans are being de-funded at nearly every employer in the country. The companies, particularly those in tech, know that their money is better spent on current business. Most employees fully expect to change jobs several time in their careers, and companies which recognize this and shift benefit dollars to something employees actually plan to use will end up with better talent. And why be handcuffed to a job you don't like by a retirement plan that may not actually be there when you're ready to leave? There's not many companies that actually have "retirement" plans anymore, other than the standard 401k and (often) some level of company match.

Consider a company that offers benefits that you would actually use. A standard package of health benefits could be useful if you're often sick, but one of the things companies love about college hires is that they rarely use the medical plan. If you sense some flexibility in this area, maybe someone's willing to offer LASIK, full orthodontia, and other perks that might be more valuable to you. Discuss it at the last meeting when the actual offer is on the table.

My first job was with a company that had a full company match on dollars spent by the employee on company stock, up to a cap. For me, this amounted to an immediate 12 percent raise on my base pay. Take a good look at benefit like that, as it can be a significant perk, even if all you do is exercise and sell immediately. If you hold the stock and it's value increases, so much the better.

Options can be iffy. The typical plan has a 25/25/25/25 vesting schedule over a 4-year span. Any options you plan to exercise are immediately taxable as regular income in the year that you exercise. Any gains you make on the sale price versus the strike price are taxed as normal stock sales, which means you have to hold it for a year or be taxed at the short-term capital gains rate. If the options and the company are attractive, I'd recommend a tax attorney to help you sleep at night and to stay out of the IRS's crosshairs.

Something else to consider for any salaried position is the potential for being expected to put in uncompensated overtime. It's one thing to put in a few extra hours now and then to meet a critical deadline; it's another thing entirely if 50+ hour weeks are the rule rather than the exception.

Unfortunately, this isn't something you can really ask about without potentially raising suspicions that you won't come through for them when there's a crunch. If you're lucky, one of the people who's interviewing you will volunteer the information. Failing that, it helps if you know someone else who already works there who can fill you in on details like this "off the record".

Or maybe you're a workaholic, in which case it doesn't matter since you'd be at the office 60 hours/week anyway...

Thanks for the replies so far!

sluggo wrote:

Congrats on the degree and here's hoping the offers are good!

Thanks

sluggo wrote:

First off, I would almost completely discount any retirement benefits. Unless you're looking at civil service positions, retirement plans are being de-funded at nearly every employer in the country. The companies, particularly those in tech, know that their money is better spent on current business. Most employees fully expect to change jobs several time in their careers, and companies which recognize this and shift benefit dollars to something employees actually plan to use will end up with better talent. And why be handcuffed to a job you don't like by a retirement plan that may not actually be there when you're ready to leave? There's not many companies that actually have "retirement" plans anymore, other than the standard 401k and (often) some level of company match.

Yea, I don't expect a pension or anything. I've been told though that I should look at the company's matching policies for 401K because putting money away now is apparently a really good idea. I don't really know how 401Ks work though. Are they transferable between companies? Does the money I put away gain interest? What are competitive matching rates?

sluggo wrote:

Consider a company that offers benefits that you would actually use. A standard package of health benefits could be useful if you're often sick, but one of the things companies love about college hires is that they rarely use the medical plan. If you sense some flexibility in this area, maybe someone's willing to offer LASIK, full orthodontia, and other perks that might be more valuable to you. Discuss it at the last meeting when the actual offer is on the table.

Good to know. I'm not often sick, but it never hurts to have better coverage.

sluggo wrote:

My first job was with a company that had a full company match on dollars spent by the employee on company stock, up to a cap. For me, this amounted to an immediate 12 percent raise on my base pay. Take a good look at benefit like that, as it can be a significant perk, even if all you do is exercise and sell immediately. If you hold the stock and it's value increases, so much the better.

Did they tell you this up front or did you get it after asking if they had something like that? Is there a name for this benefit?

sluggo wrote:

Options can be iffy. The typical plan has a 25/25/25/25 vesting schedule over a 4-year span. Any options you plan to exercise are immediately taxable as regular income in the year that you exercise. Any gains you make on the sale price versus the strike price are taxed as normal stock sales, which means you have to hold it for a year or be taxed at the short-term capital gains rate. If the options and the company are attractive, I'd recommend a tax attorney to help you sleep at night and to stay out of the IRS's crosshairs.

I'm still trying to figure out how this all stock vs. options things works so yea..

just brew it! wrote:

Something else to consider for any salaried position is the potential for being expected to put in uncompensated overtime. It's one thing to put in a few extra hours now and then to meet a critical deadline; it's another thing entirely if 50+ hour weeks are the rule rather than the exception.

Unfortunately, this isn't something you can really ask about without potentially raising suspicions that you won't come through for them when there's a crunch. If you're lucky, one of the people who's interviewing you will volunteer the information. Failing that, it helps if you know someone else who already works there who can fill you in on details like this "off the record".

I'm actually moving into the videogame industry so yea, crunch is par for the course. The current offer I'm considering pays hourly with OT compensation, but I'm ineligible for bonuses (for sure) and stock options (I think). The base pay isn't as competitive as I was hoping so I'm currently trying to negotiate that up. Any negotiating tips would be appreciated as well.

You should also consider where you will be living. Making $100,000, but living in San Fransisco might be the same standard of living as $50,000 in other parts of the country. You should compare salaries only after normalizing for cost of living in that area.

The most important thing that you could do is to talk to people who have/do actually work at these companies. This may be difficult if you don't know many people already in the industry. Friends who have graduated a year or two before might be able to give some guidance. You don't want to go work for a company if you wouldn't fit into their culture well.

TurtlePerson2 wrote:

The most important thing that you could do is to talk to people who have/do actually work at these companies. This may be difficult if you don't know many people already in the industry. Friends who have graduated a year or two before might be able to give some guidance. You don't want to go work for a company if you wouldn't fit into their culture well.

Well... yes and no. The most important thing right now is to get some real-world experience. A little bit of moving from job to job early in your career is to be expected. Of course it's *better* to find a place where you fit in really well right off the bat; but don't obsess about this aspect too much.

Zoomastigophora wrote:

Yea, I don't expect a pension or anything. I've been told though that I should look at the company's matching policies for 401K because putting money away now is apparently a really good idea. I don't really know how 401Ks work though. Are they transferable between companies? Does the money I put away gain interest? What are competitive matching rates?

A 401(k) is an account of pre-tax cash invested in your name. If you move to another company, you can file a bit of paperwork to transfer it with no penalties into another qualified 401(k) plan. If you want to go independent, you can move it into a qualified plan such as an IRA. If you hit a truly serious financial emergency you can also make early withdrawals on the account, but there's a substantial tax penalty; if you start drawing after age 59-1/2, then it is taxed as normal income. If you die, it is part of your assets and distributed to your heirs. The main reason to get one set up and start putting funds in it ASAP is that instead of having to save away ALL the income you will need during retirement, you can let compound interest make it big for you. The more and earlier you get money in there, the bigger it will become.

Whatever you do, make sure the Return on Resume is good - make sure it focuses on skills you either have or want to develop, and make sure if things go sour you can always say it looks good when you look for your next position

I'm in Canada where we have RRSPs rather than 401k's but a good employer match would be up to 5% of your salary - this is free money as well as a good start on your retirement so do it.

For stock options - you get granted say 1000 options to purchase shares at the current stock price e.g. $10. You can't touch them initially but then they "vest" meaning that you can "exercise" the option - i.e. purchase those shares at $10. As the vesting is something like a few years, hopefully by that time the stock has gone up to e.g. $20. You can either 1) Pay $10,000 and now have stock worth $20,000, 2) Do a "same-day-sale", they loan you $10,000, sell all the shares for $20,000 then take back their $10,000 so you now get $10,000 in cash, 3) Do some mix of the first two, commonly sell 500 shares to cover the cost of all of them and then hold the rest.

Look for company performance bonuses - common are 15% x company performance factor x employee performance factor.

There can also be Employee Stock Purchase Plans where the company will either match your purchase (as mentioned earlier) or let you buy shares at a discount e.g. 10%. These are actual shares that you can then sell when you like. Again this is free money so take advantage of it.

One piece of advice about stocks - try not to hold too much in your own company. If your company is doing well then the stock price does go up but the salaries and bonuses are likely to go up as well. The big danger is if the company tanks then you could be out of a job and with your investment worth very little. Diversify to spread the risk. Do take advantage of options and ESPPs but sell out of them and buy stock elsewhere rather than putting all your eggs in one basket.

I'm a software developer, not a finance type and everything above is worth what you paid for it.

notfred wrote:

One piece of advice about stocks - try not to hold too much in your own company. If your company is doing well then the stock price does go up but the salaries and bonuses are likely to go up as well. The big danger is if the company tanks then you could be out of a job and with your investment worth very little. Diversify to spread the risk. Do take advantage of options and ESPPs but sell out of them and buy stock elsewhere rather than putting all your eggs in one basket.

Can't stress this enough. I know someone who got burned quite badly by *not* doing this. He used to work at Lucent, and invested most of his retirement account in Lucent stock. When Lucent tanked, his savings were nearly wiped out.

I know retirement seems impossibly distant to you right now, but given that there's a very real risk that Social Security won't be there for you when you get older, you need to plan ahead.

Some people might disagree, but in my experience I have found it is important to negotiate. Sometimes it isn't so much the actual end result of the process, but more how the company approaches the process that seals the deal for me - are they really interested in me? Are they willing to play ball and listen to what I want? Do they clearly articulate their position (with regards to my compensation)? You want to work for a company that cares for its employees, and if they can't even pretend to do so during the initial HR crap then what hope is there?
I have also never hesitated to let companies know when there are competing offers on the table (and talk with them frankly about the pros and cons of their own offer).

When evaluating jobs, I usually consider the following criteria even above things like compensation, though: #1. Location (gotta be happy with where you are), #2. Workplace environment (home/life balance, amount of bureaucracy, intellectual freedom), #3. ability to learn new things/advance within the organization.

Base salary is by far the most important, as all your raises (% raise), and future salaries (offers) are based off this original number. There is always room to negotiate.

401k's are basically a basket of stock/mutual fund plans that you are expected to leave your money parked in. (I believe the advantage is that money comes out of your paycheck pre-tax). Some companies match your contributions up to a point, which is good. If you can afford to start putting money away, even no match is fine. 401k's with at least $5000 will follow you, but you can always roll it over into an IRA or another 401k. Under $5000, I believe companies have the option to cash you out and cut you a check.

Health benefits and other packages like that are more important depending on your health, and those of your dependents/spouse.

One other thing that can be negotiated is the vacation/Planned Time Off days. If the rest of the offer isn't strong, you can always see if you can get more time off per year.

Also, most companies have stopped offering options, and go with Restricted Stock Units now. Options are not worth considering, unless you are joining a startup. In an established company, you will never own enough options to make it a significant chunk of money.

1. Negotiate for a little more pay. I'm assuming you'll be making mid-high 5 figures, but my conversation with the companies I negotiated with this summer (first real job offers out of college) went like this. "I know $4,000 a year isn't a lot to you, your department's budget, or this project, but it means a lot to me and my wife. If they say no to that then it's probably not worth working there, unless you're already being offered a very high wage for your time. If you both think you're a fit for the team and the position, and you have the talent to back it up, go for it.

2. Experience! I did my internship where I contract engineer now. I don't get many "go ahead and spend a week on this technology with no visible benefit to the company" opportunities anymore, but I still get little pet learning projects here and there. Stress your talent, how quickly you learn, and especially that you're willing to learn things that nobody on the project/in the company already knows how to do. If they're open to some long-term payoff, that's a good sign.

3. Don't be afraid to contract! I'm making WAY more money now through contracting than I would if I were salary. You should get more than the hourly rate for salaried employees, plus you get overtime. Because we're young we don't really lose out so much on healthcare costs, and I don't miss PTO because I've never had it, contracting can be a profitable venture starting out. I definitely enjoy the tens of thousands of dollars annual cash payment that comes from not having PTO, providing my own health care (medica solo for less than $100/month!), and most importantly, getting a steep overtime rate. Find a hot project, become an expert in something, get approved for overtime, and cash in (and get experience and be appreciated/valued!). The danger is to avoid the "turn and burn" companies that crank through contractors and don't treat them as people.

4. Remember the resume/business boosters. If you're not reducing costs or adding value to a product, you're not doing it right.

Thanks to everyone that's posted, reminds me why TR is the only tech forum I bother reading and posting on .

Since there's too much to respond to, I figured I'd just update everyone on the current situation. The company surprisingly matched my requested salary, which makes me wonder if I inadvertently low-balled myself. The location is the San Francisco area, and doing some quick craigslisting and online paycheck calculating, it seems I'd be spending about a third to a half of my net income on housing expenses, which is pretty rough. I would enjoy the work though and the position/company will look good on my resume.

Edit: Redacted the specific offer details, but you can extrapolate based on estimated $1800 housing expense.

San Fransisco is one of the most expensive places to live in the entire USA. You need to factor in more than just rent. Food costs a lot more in San Fransisco than it does outside the city. I would assume that you will not be living in the actual city of San Fransisco, but cost of living outside of the city will be elevated as well, though not as extreme. Also keep in mind that California has some of the most expensive taxes in the country (for individuals not for businesses, hence the large number of jobs).

Zoomastigophora wrote:

The company surprisingly matched my requested salary, which makes me wonder if I inadvertently low-balled myself.

This is why they want you to request a salary. Most people don't know how much they are truly worth, especially if they aren't coming from another job. Fortunately you're not screwed just because you low-balled yourself. Assuming that it is true, you can call them up and tell them that you would really like to work for them, but that another offer is going to compensate you better and that you would like X amount of money so that you can justify coming to work for them. I'm not a big fan of lying, but I suppose you could tell them the same thing even if it weren't true.

TurtlePerson2 wrote:

San Fransisco is one of the most expensive places to live in the entire USA. You need to factor in more than just rent. Food costs a lot more in San Fransisco than it does outside the city. I would assume that you will not be living in the actual city of San Fransisco, but cost of living outside of the city will be elevated as well, though not as extreme. Also keep in mind that California has some of the most expensive taxes in the country (for individuals not for businesses, hence the large number of jobs).

Yea, I live in LA so the sticker shock on cost of living in SF isn't as great for me, but I was surprised that it seemed like it would be more than LA. The salary would allow me to support myself, but I won't end up with a lot of disposable income and I was hoping I'd be able to keep my PC more aggressively up to date

TurtlePerson2 wrote:

This is why they want you to request a salary. Most people don't know how much they are truly worth, especially if they aren't coming from another job. Fortunately you're not screwed just because you low-balled yourself. Assuming that it is true, you can call them up and tell them that you would really like to work for them, but that another offer is going to compensate you better and that you would like X amount of money so that you can justify coming to work for them. I'm not a big fan of lying, but I suppose you could tell them the same thing even if it weren't true.

This was actually the salary I requested after hearing their initial offer so I certainly came out better in that regards. I just wonder if I could/should have requested more, but I guess that's always the case when negotiating. And yea, I wouldn't be super comfortable lying to see if I could get a higher salary since that puts me in an awkward position if they can't/won't meet it.

Zoomastigophora wrote:

TurtlePerson2 wrote:

San Fransisco is one of the most expensive places to live in the entire USA. You need to factor in more than just rent. Food costs a lot more in San Fransisco than it does outside the city. I would assume that you will not be living in the actual city of San Fransisco, but cost of living outside of the city will be elevated as well, though not as extreme. Also keep in mind that California has some of the most expensive taxes in the country (for individuals not for businesses, hence the large number of jobs).

Yea, I live in LA so the sticker shock on cost of living in SF isn't as great for me, but I was surprised that it seemed like it would be more than LA. The salary would allow me to support myself, but I won't end up with a lot of disposable income and I was hoping I'd be able to keep my PC more aggressively up to date

TurtlePerson2 wrote:

This is why they want you to request a salary. Most people don't know how much they are truly worth, especially if they aren't coming from another job. Fortunately you're not screwed just because you low-balled yourself. Assuming that it is true, you can call them up and tell them that you would really like to work for them, but that another offer is going to compensate you better and that you would like X amount of money so that you can justify coming to work for them. I'm not a big fan of lying, but I suppose you could tell them the same thing even if it weren't true.

This was actually the salary I requested after hearing their initial offer so I certainly came out better in that regards. I just wonder if I could/should have requested more, but I guess that's always the case when negotiating. And yea, I wouldn't be super comfortable lying to see if I could get a higher salary since that puts me in an awkward position if they can't/won't meet it.

Once you get more experience and skills you would have more leverage when it comes to negotiating your salary. Generally, with your very first job out of college i think you sometimes have to take what you can get, but not sell yourself out as well. This of course depends on the person and their individual situation. If they met your salary at the market average (for San Francisco, not the national average - big difference) for a person of your skill and your background, then consider yourself successful.

If you have any questions about the living situation in SF, feel free to ask questions.

Zoomastigophora wrote:

Thanks to everyone that's posted, reminds me why TR is the only tech forum I bother reading and posting on .

Since there's too much to respond to, I figured I'd just update everyone on the current situation. The company surprisingly matched my requested salary, which makes me wonder if I inadvertently low-balled myself. The location is the San Francisco area, and doing some quick craigslisting and online paycheck calculating, it seems I'd be spending about a third to a half of my net income on housing expenses, which is pretty rough. I would enjoy the work though and the position/company will look good on my resume.

Edit: Redacted the specific offer details, but you can extrapolate based on estimated $1800 housing expense.

If raw housing costs are going to chew through more than 1/3 of your take-home salary then you need to look long and hard at whether (a) this is the job you really want, (b) does it have room for substantial advancement and pay increases in the 3-5 year timeframe, and (c) will it fluff up your resume nicely if you need to move? Otherwise, you're going to have a hard time maintaining a couple hobbies and saving up an emergency fund.

On the other hand, in the Bay Area it may be feasible to skip car ownership in favor of public transit, and maybe get a Zip Car membership for those occasional runs out of town. In which case you could figure the difference between public transit + zip car and actual car ownership, and then apply the difference to your tolerable housing budget.

My wife is addicted to the shows that Gail Vaz-Oxlade does about people who are in debt. There's an online budget worksheet
http://www.gailvazoxlade.com/resources/ ... sheet.html
This recommends a budget breakdown of: Housing 35%, Transportation 15%, Life 25%, Debt repayment 15%, Savings 10%. If your housing costs are closer to 50% then you may want to rethink.

That's a nifty little calculator, and sound advice.

There's a lot of luxury to be found in living comfortably within your means.

notfred wrote:

Look for company performance bonuses - common are 15% x company performance factor x employee performance factor.

That's a pretty impressive factor for perf bonuses... If the company I've been working for had that, I'd be more the richer!

thegleek wrote:

notfred wrote:

Look for company performance bonuses - common are 15% x company performance factor x employee performance factor.

That's a pretty impressive factor for perf bonuses... If the company I've been working for had that, I'd be more the richer!

Not necessarily. The "performance factor" numbers are ultimately determined by the HR people and bean counters; in other words, they're (almost) completely arbitrary. Set either one to zero, and no bonus.

notfred wrote:

My wife is addicted to the shows that Gail Vaz-Oxlade does about people who are in debt. There's an online budget worksheet
http://www.gailvazoxlade.com/resources/ ... sheet.html
This recommends a budget breakdown of: Housing 35%, Transportation 15%, Life 25%, Debt repayment 15%, Savings 10%. If your housing costs are closer to 50% then you may want to rethink.

The housing costs numbers are just broad estimates on my part based on what housing prices seem to be in the SF area, and not accounting for any OT I would have to be doing. Still, it is a little vexing that I could potentially be spending a lot of my net income simply paying for my housing. On the flip side, the project is very interesting and I think I'd enjoy my role at the company. It's a game that I think a lot of TR people have been wanting for a long time now as well . I'm gonna ping my hiring manager and get his take on cost of living in the area.

1/3 of your income for housing in the Bay Area sounds about right ... (yes, I live and grew up in the area)..

Depending on where the office is, there are cheaper options on the outskirts of the city, which may have decent to good public transit. If you want to PM with any details, I'd be happy to give you some advice (and suggestions on living).

Also depends on the lifestyle you want to have (city active vs. quiet suburbs).

Also, as an FYI, rents can jump up faster than income so expect to move a lot, since you can get good move-in bonuses.

SO... to bring up this thread once again.

Changing jobs... Not careers... What to weigh?

01. long tenure vs new position
02. well-paid salary vs 5-10k (or more) in salary
03. similar responsibilities
04. health benefits
05. 401k/stock options
06. commute distance to work -vs- relocating to another state
07. office time vs work-at-home time
08. fortune 500 size of company vs smaller corporation
09. management role vs non-management role
10. fringe benefits
11. reputation of company
12. hired through recruiters vs direct hire
13. short-term contract based vs long-term salary

did i miss anything?

thegleek wrote:

SO... to bring up this thread once again.

Changing jobs... Not careers... What to weigh?

01. long tenure vs new position
02. well-paid salary vs 5-10k (or more) in salary
03. similar responsibilities
04. health benefits
05. 401k/stock options
06. commute distance to work -vs- relocating to another state
07. office time vs work-at-home time
08. fortune 500 size of company vs smaller corporation
09. management role vs non-management role
10. fringe benefits
11. reputation of company
12. hired through recruiters vs direct hire
13. short-term contract based vs long-term salary

did i miss anything?

Potential for growth within the company?

From my experience at this point, I'd say pay is the biggest factor, followed by commute. (since you said not changing careers, only job)

Almost all of the other options become negligible when evaluating and cloud the issue. I'd give 5-10k value if you really enjoy your current work environment, but beyond that you're better off taking a new position. All the "fringe" benefits tend to confuse the issue and make you think you are getting more than you are.

The only item I'd change is salary vs. start-up (I know weird comparison).

Basically if you are looking for something stable, provide medical for your family and are relatively risk averse, then look at a salaried position if you can get it. If you are single, early in your career, and don't have too many obligations to worry about, I'd say go for a start-up or pre-IPO (hopefully at least 1 to 2 years from IPO, maybe longer) company..The payoff will be much better in the long run.

Potential for growth in a company, I feel is a canard.. All companies have some potential, but generally that gets you to the bottom half of middle management.. from there it's nearly impossible to break through and get to the upper management levels in an established company (generally people at that level don't want to leave if they don't have to).

thegleek wrote:

SO... to bring up this thread once again.

Changing jobs... Not careers... What to weigh?

01. long tenure vs new position
02. well-paid salary vs 5-10k (or more) in salary
03. similar responsibilities
04. health benefits
05. 401k/stock options
06. commute distance to work -vs- relocating to another state
07. office time vs work-at-home time
08. fortune 500 size of company vs smaller corporation
09. management role vs non-management role
10. fringe benefits
11. reputation of company
12. hired through recruiters vs direct hire
13. short-term contract based vs long-term salary

did i miss anything?

14. Field of the business
15. Focus of the business/Focus of the owners

Pick a company in a field with lots of money in it, Oil and Gas for instance, and you'll get paid and work on well funded projects. Pick a company in a field that's sick, Newspapers, and you'll be getting crumbs.

The field of the business will also affect how much tech you'll get to see. A real estate company will be different then a bank. Pick a consulting company that specializes in technology services, and you'll see lots of different things, good and bad.

If the business or the owner doesn't consider tech a priority and bare minimum is good enough, then there's not much you can do. Technology is expensive, with a lot of maintenance involved.

druidcent wrote:

401k's are basically a basket of stock/mutual fund plans that you are expected to leave your money parked in. (I believe the advantage is that money comes out of your paycheck pre-tax). Some companies match your contributions up to a point, which is good. If you can afford to start putting money away, even no match is fine. 401k's with at least $5000 will follow you, but you can always roll it over into an IRA or another 401k. Under $5000, I believe companies have the option to cash you out and cut you a check.

401(k)s, matched or not, are one of the few remaining licenses to steal in the US tax code. The money goes in pre-tax and the distributions (starting at 59.5 and mandatory by 70.5) are taxed as ordinary income when withdrawn. If you switch jobs, a previous 401(k) is fully portable into the 401(k) at your new job. There's a few tricky bits, but whoever administers your plan can easily guide you through them.

If your company matches, put in the max subject to match. If they don't match, put in at least 6% of your pay. You 20-somethings always look at retirement as something to be funded tomorrow. I'm 48 and am nowhere near where I need to be for retirement even if I wait until 68, let alone putting a kid through college, mainly because I spent my 20s and half my 30s spending money on all the wrong things. Even in today's crappy market 40 years of compound interest will have an effect.

In short: The day you walk into the employment world is the day you need to start your retirement planning. Don't let anyone tell you it's wasted money.